The Definitive Guide to Buying/Selling/Trading Cryptocurrency in Australia

Bitcoin and Ethereum are blockchain technologies, which uses peer-to-peer like networking technology (like BitTorrent) to create a network of nodes which synchronise every transaction on the network. Transactions between “accounts” are recorded on the blockchain, which keeps record of every single transaction on the network, on every single node – this means that transactions are highly secure, and cannot be reversed. This high security is provided by a process called “mining”, which requires the transactions to be “hashed”, a process of computing large amounts of random jibberish to a certain specification (let’s call if difficulty) such that when the specification is met, transactions which are used to compute that jibberish, are committed to the network and through a process of synchronising and voting, are rendered permanent.

What makes Ethereum miles different to BitCoin, is the addition of distributed application technology; allowing developers to write “contracts” which can be used to represent simple things like voting in an election, or creating a shareholder registry backed by Ethereum currency (which in itself has spawned a number of “ICO”‘s; initial coin offerings; the equivelant of an IPO).

Why is Getting Started with Cryptocurrency so hard?!

Good question. The financial world is full of regulation. As Bitcoin, Ethereum and other cryptocurrencies are digital currencies, you can’t just go to the bank and exchange your money. To buy cryptocurrency, you need to have an account with an intermediary, who will take your “real” money in the form of AUD or USD, and exchange this for ETH(Ethereum), BTC (bitcoin) or one of many many hundreds of cryptocurrency coins or tokens.. The problem for Australian’s, is we have limited choices here; there’s only a small handful of services which allow you to purchase these currencies, and even fewer which allow Australian’s to sell it!

Deposit money into your exchange account

You will usually deposit money into a cryptocurrency exchange via a bank deposit/transfer, credit card payment or other money transfer

Use the exchange to buy cryptocurrency

Transfer cryptocurrency into a “wallet”

Now that you have bought cryptocurrency, you need to make sure it is kept secure. If you are going to simply trade cryptocurrencies, you can generally leave your funds safely on the exchange. If you are looking to hold your cryptocurrency for a longer term, or to use for purchasing goods and services on the internet, we recommend the use of a hardware wallet, such as a Trezor or Ledger Wallet. You can also transfer your cryptocurrency to other exchanges such as Binance, where you can trade cryptocurrencies in higher volumes and with lower transaction fees.

Sell cryptocurrency for fiat (dollars)

While your cryptocurrency lives on an Australian cryptocurrency exchange, you can sell your bitcoin, ethereum or other cryptocurrency for Australian dollars.

Withdraw to your bank account, cheque, or credit card

Once you have sold your cryptocurrency, the exchange will credit your account with Australian dollars, which you can withdraw to your Australian bank account.

Fund your CoinSpot account from your bank account, PoliPay, or at a newsagent

Buy Bitcoin/Ethereum and other cryptocurrency

Sell your cryptocurrency (either bought on CoinSpot, or transferred to their wallet)

Withdraw to your bank account

Simple!

What’s different with cryptocurrency, is that you are even more responsible for securing your new found money. If your CoinSpot account is hacked, it’s easy for someone to send the Ethereum/Bitcoin in your account to their own account, and at that point, it’s gone forever.

You MUST secure your account, your computer, and any other devices you use to login!

!!! Add Two-Factor Authentication to your account – CoinSpot uses the Google Authenticator to verify that it’s you; if you’re prone to losing your phone, you need to be a little bit more responsible…!!! Never disclose your wallet/account addresses to anyone on social media – if someone has your address, they can easily query the balance of your account, and target youOnce you have funds in your CoinSpot account, transfer them to a new account which is not held on CoinSpot or any web based account!

What is ADCA and what is it’s relevance to Cryptocurrency exchanges in Australia?

ADCA stands for Australian Digital Commerce Association.

The following excerpt is taken from the ADCA website (https://adca.asn.au):

“ADCA is the industry network for businesses implementing blockchain solutions. ADCA members work together to build understanding of the potential of blockchain technology, share best practice and engage with government and regulatory stakeholders.”

KYC & AML

KYC stands for Know Your Customer, and AML stands for Anti-money Laundering. Together, these techniques are applied to all users of Australian cryptocurrency exchanges to ensure that users are identified correctly, reducing the likelihood (and anonymity) of blockchain transactions being used anonymously for nefarious transactions (i.e. dark web, drugs, underworld and criminal activity, weapons exchange etc). Australian financial providers, including Cryptocurrency exchanges, are heavily regulated, and must comply with KYC & AML legislation/requirements to operate. This generally takes the form of submitting multiple forms of identification to verify your account, such as your drivers license, a rates notice, or passport. Verification of your mobile phone, email address and other contact details is also generally required.

Is CoinSpot Safe?

CoinSpot is one of Australia’s leading cryptocurrency exchanges. They provide a very simple and easy to use website, and allow beginners to get started buying and selling cryptocurrency very quickly. With a range of over 100+ coins and tokens to choose from, CoinSpot is quite diverse. Deposits and withdrawals can be made directly to/from your bank account, and withdrawals typically take 1-2 business days before your funds are deposited into your bank account, whilst deposits to CoinSpot are typically instant.

Can I use Coinbase and other Cryptocurrency Exchanges in Australia?

Absolutely! Coinbase introduced bitcoin purchasing to Australia in 2016, and since has grown it’s offering to include Ripple and Ethereum, with additional coins being added in 2018. Exchanges such as Bittrex, Binance, and many more can also be used, provided you keep records of your transactions for taxation purposes.